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Best Company Sells Office Supplies -
Required: Prepare an Income Statement for Best Company, a Operating

question 99

Essay

Best Company sells office supplies. The following information summarizes Best's operating activities for 2012:
 Utilities for store $6,000 Rent for store $8,000 Sales commissions $4,500 Purchases of merchandise $54,000 Inventory on January 1,2012$30,000 Inventory on December 31,2012$20,500 Sales revenue $108,000\begin{array}{|l|r|}\hline \text { Utilities for store } & \$ 6,000 \\\hline \text { Rent for store } & \$ 8,000 \\\hline \text { Sales commissions } & \$ 4,500 \\ \hline \text { Purchases of merchandise } & \$ 54,000 \\\hline \text { Inventory on January } 1,2012 & \$ 30,000 \\\hline \text { Inventory on December } 31,2012 & \$ 20,500 \\\hline \text { Sales revenue } & \$ 108,000 \\\hline\end{array}
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Required: Prepare an income statement for Best Company, a merchandiser, for the year ended December 31, 2012.using the format below:
Sales revenue
 Cost of goods sold  Beginning inventory  Purchases  Cost of goods available for sale  Ending inventory  Cost of goods sold  Gross profit  Selling expenses  Sales commissions  General expenses  Rent expense  Utilities expense  Total operating expenses  Net income/(loss) \begin{array} { | l | l | l | } \hline \text { Cost of goods sold } & \quad\quad&\quad\quad \\\hline \text { Beginning inventory } & & \\\hline \text { Purchases } & & \\\hline \text { Cost of goods available for sale } & & \\\hline \text { Ending inventory } & & \\\hline \text { Cost of goods sold } & & \\\hline \text { Gross profit } & & \\\hline \text { Selling expenses } & & \\\hline \text { Sales commissions } & & \\\hline \text { General expenses } & & \\\hline \text { Rent expense } & & \\\hline \text { Utilities expense } & & \\\hline \text { Total operating expenses } & & \\\hline \text { Net income/(loss) } & & \\\hline\end{array}


Definitions:

Accounting Functions

The systematic process of recording, analyzing, summarizing, and reporting the financial transactions of a business.

Collateral

Assets pledged by a borrower to secure a loan or other credit, ensuring the lender can seize these assets if the borrower fails to repay.

C-Corporation

A C-Corporation is a business structure where the owners or shareholders are taxed separately from the entity, which is recognized as a legal entity under U.S. law.

Double Taxation

The imposition of taxes on the same income, asset, or financial transaction at two different levels, such as corporate earnings and shareholder dividends.

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